Inside The Hive, a top-secret genetic research facility owned by the Umbrella Corporation located deep beneath Raccoon City, an unidentified thief drops a blue vial in a lab, exits, and seals the room. The vial breaks and the facility's security system, The Red Queen, detects possible infection, and in response, seals the Hive, killing everyone inside.
Elsewhere, Alice (Milla Jovovich) awakens in an empty mansion with amnesia. She and a police officer, Matt (Eric Mabius), are seized by a group of commandos and taken to an underground train station which leads to The Hive. They are joined by Spence (James Purefoy), who is also suffering from amnesia. The head of the commandos, “One”, explains that everyone in the group, except the police officer, is an employee of the Umbrella Corporation. It is also revealed that The Red Queen is responsible for releasing a nerve gas in the mansion which has caused their amnesia. When the train arrives, the group opens and enters The Hive.
The group eventually finds their way to The Queen's chamber; however, as they attempt to disable her, four of the commandos, including One, are killed. The only commandos left alive are Rain (Michelle Rodriguez), Kaplan, and J.D. Alice and Kaplan then shut The Queen down, opening the doors of the facility, releasing the now zombified staff and other experiments into The Hive. During a battle between the group and some of the zombies, Rain becomes infected after receiving multiple bite wounds and J.D. is killed.
As the group moves throughout The Hive, Alice and Spence slowly regain their memory. Later, Matt and Alice are separated from Kaplan, Rain, and Spence, who remain in near The Queen's chamber. Matt looks for information about his sister, while Alice encounters several dogs which were experimented on and surprises herself when she uses martial arts to defend herself.
Matt eventually finds his sister, Lisa, who is now a zombie. As she attacks him, Alice arrives in time to save him. Matt explains that he and Lisa unsuccessfully attempted to smuggle out a sample of the blue vial, the T-Virus, in the hopes of taking down Umbrella. Matt believes this to be the fault of Lisa's contact, who supposedly betrayed her. Alice, remembering she was Lisa's contact, remains silent.
Soon, the survivors are once more united at The Queen's chamber and are forced to switch her back on to find an exit; the Red Queen agrees to help them. As Alice and the others try to escape through the maintenance tunnels, they are ambushed by zombies. Kaplan is separated from the rest of the team on their way to the train. Alice suddenly remembers that an anti-virus exists that could cure the T-Virus infection.
Upon their arrival at the lab, they find that the vials containing the T-Virus and anti-virus are gone. Spence, fully regaining his memory, is shown as the person who stole and released the virus and stashed the anti-virus on the train. He traps the survivors in the lab and heads toward the train, but before he can inject himself with the anti-virus, he is killed by a mutated creature called the Licker. Back at the lab, The Queen offers to spare Alice and Matt if they kill Rain, who has been infected for too long for the anti-virus to work. As the Licker attempts to bash through the lab window to get to them, a sudden power-outage occurs. The laboratory door opens to reveal Kaplan, who has permanently disabled the Red Queen.
The four survivors start the train before The Hive is locked in quarantine. As the train heads back to the mansion, the Licker hurls Kaplan from the train and attacks the group. Alice battles the Licker as Matt kills a now zombified Rain. Matt, after having been clawed by the Licker, opens a trap door on the bottom of the train, causing the Licker to be dragged along the track and burned to death.
Matt and Alice arrive at the mansion, and escape at the last moment when the doors close. Matt begins to mutate due to the Licker's unstable T-Virus, which affected Matt through his claw wounds. Before Alice can give him the anti-virus, the mansion doors burst open and Umbrella scientists seize them. They subdue Alice and take Matt away, revealing he is to be put into the "Nemesis Program" and they intend to re-open the Hive. Alice attempts to fend them off, but they overpower her and knock her unconscious.
Later, Alice awakens at the Raccoon City Hospital locked in an observation room, having seemingly been operated on by the Umbrella scientists. After escaping the room and wandering the hospital's empty halls, Alice exits the building to find Raccoon City abandoned with signs of chaos everywhere; a newspaper clip shows that the T-Virus has spread to the surface, creating an army of zombies. Realizing the team had failed in their mission, Alice arms herself with a shotgun from a nearby police car.